Akamai to Acquire ChameleonX to Enhance Threat Detection Tech

Akamai Technologies AKAM recently inked deal to acquire Tel Aviv, Israel-based private company — ChameleonX — to fortify its security portfolio.

The financial terms of the agreement have not been officially disclosed. However, sources familiar with the deal state that the acquisition is valued at nearly $20 million.

Akamai expects closure of the deal in the fourth quarter of 2019. Further, the acquirer does not anticipate any significant financial impact to 2019 or 2020 results.

Notably, ChameleonX provides cybersecurity solution to guard websites from attacks which hack user’s online payment details and other credential data.

ChameleonX has expertise in self-protection technology that is aimed at detecting malicious code injected by cyber attackers in the early phase within the user’s browser.

We believe that the latest deal will enable Akamai to provide robust website security solutions to customers, who can safeguard critical user data of immense financial value.

Coming to price performance, shares of Akamai have returned 46.7% year to date, against the industry’s decline of 0.7%.

ChameleonX Technology Bodes Well

With rapid adoption of cloud computing, security has become a major concern for enterprises. Hackers are using new and sophisticated techniques to take advantage of the security loopholes in the cloud.

Specifically, hackers are trying to escape the traditional threat mitigation and detection technology by injecting malicious code from third parties within the user's browser. ChameleonX technology identifies this malicious code early in the user’s system, preventing it to cause significant financial damage.

Consequently, the latest acquisition will add robust threat detection capabilities to Akamai’s portfolio. This will enable customers to protect user data from malicious code from third-parties.

Strengthening Security Portfolio Holds Promise

Akamai is leaving no stone unturned to enhance network security and application micro-segmentation capabilities to address DDoS, botnet and malware among other threats.

Moreover, large enterprises are expected to increase security budgets to efficiently address security concerns and instill confidence in cloud computing.

Strategic portfolio-expansion initiatives through acquisitions and product enhancements are expected to boost the company's financial performance.

Notably, growing clout of Akamai’s security solutions can be substantiated by Gartner recently positioning the company as a “Leader” in the “2019 Magic Quadrant for Web Application Firewalls."

Recently, the company announced the acquisition of KryptCo. The buyout will enable the company to gain multifactor authentication technology and enhance security portfolio with zero trust capabilities.

We believe that high demand for Akamai’s security solutions will translate into significant growth opportunities over the longer haul. Notably, management intends to achieve $1 billion run rate in security solutions in 2020, which deserves a special mention.

Zacks Rank & Other Stocks to Consider

Akamai currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Alteryx AYX, Synopsys SNPS and Keysight Technologies KEYS, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Synopsys and Keysight is currently pegged at 17.62%, 12% and 10%, respectively.

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Akamai Technologies, Inc. (AKAM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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